India Industry October 2016

India: Industrial production plummets in October

December 12, 2016

Industrial production in India plummeted in October, falling at the fastest pace in three months. Industrial output decreased 1.9% compared to the same month last year, which contrasted September’s 0.7% rise. The print undershot market analysts’ expectations of a 1.1% expansion.

October’s result was driven chiefly by a decline in manufacturing output, which fell 2.4% annually, contrasting the 0.9% expansion in September. In addition, electricity output grew 1.1% after posting stronger growth of 2.4% in September. However, the fall in mining moderated to a 2.4% decrease (September: -3.2% year-on-year).

On a use-based classification, the production of capital goods fell notably. Consumer goods also declined, while production of basic and intermediate goods picked up pace.

The trend continued to point downward. Annual average variation in industrial production swung from plus 0.5% in September to minus 0.5% in October, a multi-year low.

FocusEconomics panelists expect industrial production to increase 5.5% in fiscal year 2016, which is down 0.2 percentage points from last month’s forecast. For fiscal year 2017, the panel expects industrial output to expand 6.5%.

Operating conditions in India’s manufacturing sector were less upbeat in January from the previous month, with evidence suggesting that the Goods and Services Tax (GST) remains a risk to business performance as firms face delayed payments.